Amdocs Reports Fiscal Q1
ST. LOUIS -- Amdocs Limited (NASDAQ:DOX) today reported operating results for the three months ended December 31, 2017.
FIRST QUARTER RESULTS FOR FISCAL 2018
Reiterates Fiscal 2018 GAAP Diluted EPS Growth Outlook of 3.0%-9.0% and Non-GAAP Diluted EPS Growth Outlook of 4.0%-8.0% YoY
Signs Definitive Agreement to Acquire Vubiquity for $224M
First Quarter Fiscal 2018 Highlights
Signed definitive agreement on January 30, 2018, to acquire Vubiquity for approximately $224 million in cash, subject to customary closing conditions. The Boards of Directors of Vubiquity and Amdocs have approved the all-cash transaction which, subject to the satisfaction of the conditions to closing, is expected to be completed by the end of the second quarter of fiscal 2018
Revenue of $978 million, at the midpoint of the $960-$1,000 million guidance range adjusting for the negative impact from foreign currency movements of approximately $2 million relative to the fourth quarter of fiscal 2017
GAAP diluted EPS of $0.80, above the $0.66-$0.74 guidance range including the benefit of a lower GAAP effective tax rate
Non-GAAP diluted EPS of $1.06, above the $0.94-$1.00 guidance range including the benefit of a lower non-GAAP effective tax rate
GAAP operating income of $122 million; GAAP operating margin of 12.5% Non-GAAP operating income of $169 million; non-GAAP operating margin of 17.3%
Free cash flow of $113 million, comprised of cash flow from operations of $165 million, less $52 million in net capital expenditures and other Twelve-month backlog of $3.26 billion, up $10 million sequentially
The board of directors approved a quarterly cash dividend at the new increased rate of $0.25 per share, as approved at the January 2018 annual general meeting of shareholders, to be paid on April 20, 2018
“We are pleased with our progress in Q1 during which we sustained a high win rate to deliver another quarter of record 12-month backlog. Among the highlights, we strengthened our position in the North American Pay TV market with a new award at Rogers Communications, while in Europe we were selected for digital modernization projects at Mtel in Bulgaria and Altice SFR in France. Our second quarter has also started strong with last week’s announcement that PLDT and its Philippines’ wireless subsidiary, Smart Communications, have selected Amdocs for a seven-year, $300 million managed transformation project that will integrate our artificial intelligence, machine learning and other advanced technologies,” said Eli Gelman, president and chief executive officer of Amdocs Management Limited.
Gelman continued, “Investing in the growth engines of tomorrow is a core discipline of Amdocs and we see considerable opportunity resulting from the increased convergence of communications with media and entertainment. To further expand our capabilities in this area, we today signed a definitive agreement to acquire Vubiquity, a leading provider of premium content services and technology solutions, for $224 million in cash. Based in Los Angeles, Vubiquity connects content owners like Time Warner and Disney, distributors like Comcast and Sky and OTT providers like Netflix and Amazon to deliver entertainment across platforms on a global scale. Accordingly, we believe this move uniquely positions Amdocs to deliver a set of comprehensive content solutions that combine Vubiquity’s expertise with our monetization, analytics and personalized customer experience capabilities.”
Gelman concluded, “The visibility provided by our work in backlog and recent wins leaves us on-track for a stronger fiscal second half, although we are of course monitoring the many moving parts that may affect our outlook. Additionally, we remain committed to the proactive and disciplined allocation of free cash flow as a mechanism to enhance the expected returns for our shareholders and we are well placed to deliver full year diluted non-GAAP earnings per share growth of 4% to 8% in fiscal 2018.”
Revenue for the first fiscal quarter ended December 31, 2017 was $977.7 million, down 0.2% or $2 million sequentially from the fourth fiscal quarter of 2017 and up 2.4% as compared to last year’s first fiscal quarter. Revenue for the first fiscal quarter of 2018 includes a negative impact from foreign currency movements of approximately $2 million relative to the fourth quarter of fiscal 2017. Revenue was at the midpoint of Amdocs’ guidance, adjusting for the negative impact of foreign currency movements.
Net Income and Earnings Per Share
The Company's GAAP net income for the first quarter of fiscal 2018 was $116.9 million, or $0.80 per diluted share, compared to GAAP net income of $97.8 million, or $0.66 per diluted share, in the prior fiscal year’s first quarter. Net income on a non-GAAP basis was $154.5 million, or $1.06 per diluted share, compared to non-GAAP net income of $133.6 million, or $0.9 per diluted share, in the first quarter of fiscal 2017.
Returning Cash to Shareholders
Quarterly Cash Dividend Program: On January 30, 2018, the Board approved the Company’s next quarterly cash dividend payment at the new rate of $0.25 per share and set March 30, 2018 as the record date for determining the shareholders entitled to receive the dividend, which will be payable on April 20, 2018.
Share Repurchase Activity: Repurchased $120 million of ordinary shares during the first quarter of fiscal 2018.
Twelve-month backlog, which includes anticipated revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities, was $3.26 billion at the end of the first quarter of fiscal 2018, up $10 million from the end of the prior quarter.
Second Quarter Fiscal 2018 Outlook
Revenue of approximately $960-$1,000 million, including an immaterial sequential impact from foreign currency fluctuations as compared to the first quarter of fiscal 2018. Second quarter fiscal 2018 guidance does not incorporate any contribution from the acquisition of Vubiquity
Diluted GAAP EPS of approximately $0.65-$0.73
Diluted non-GAAP EPS of approximately $0.91-$0.97, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.05-$0.07 per share of equity-based compensation expense, net of related tax effects. Expected non-GAAP effective tax rate to be above the high-end of the annual target range of 13%-17% in the second quarter fiscal 2018
Full Year Fiscal 2018 Outlook
Reiterates revenue growth of 0.0%-4.0% year-over-year as reported and (1.0%)-3.0% year-over-year on a constant currency basis. Full year fiscal 2018 revenue guidance does not incorporate any contribution from the acquisition of Vubiquity
Reiterates GAAP diluted earnings per share growth of roughly 3.0%-9.0% year-over-year
Reiterates Non-GAAP diluted earnings per share growth of roughly 4.0%-8.0% year-over-year, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.25-$0.29 per share of equity-based compensation expense, net of related tax effects. Expected non-GAAP effective tax rate to remain within the same target range of 13%-17% for the full year fiscal 2018
The impact of the acquisition of Vubiquity on Amdocs’ diluted non-GAAP earnings per share is expected to be neutral in fiscal year 2018, and accretive thereafter. The impact on diluted GAAP EPS will not be known until after Amdocs completes the purchase price allocation. Amdocs expects to incur acquisition-related expenses related to operating adjustments, restructuring charges and other acquisition-related costs
Our second fiscal quarter 2018 and full year fiscal 2018 outlook takes into consideration the company’s expectations regarding macro and industry specific risks and various uncertainties and certain assumptions that we will discuss on our earnings conference call.
However, Amdocs notes market dynamics continue to shift rapidly and that it cannot predict all possible outcomes, including those resulting from AT&T’s proposed merger with Time Warner, or from other current and potential customer consolidation activity in North America.
Amdocs Ltd. (NYSE: DOX)